Question

At fiscal year end, December 31, 2018, Somerset Corporation had total stockholders' equity of $4,400,000. On FY 2018 year end, Somerset Corporation had Common Stock account of $1,200,000 of $10 par value common stock and Preferred Stock account of $200,000 of $100 par value. There was no treasury stock. The preferred stock was noncumulative and had a call price of $104. Use this information to determine the book value per share of Common Stock as of end of the FY 2018: (Round your answer to the nearest penny.)

Answer 1

Step-by-step explanation:

Okay then.

Let's break it down.

We have $4,400,000 in Total Stockholder Equity.

Common Stock account of $1,200,000 of $10 par value common stock.

That means that there are,

= 1,200,000/10

= 120,000 Common Stock Shares outstanding.

Out of that total stockholders' equity of $4,400,000 we need to find out how much is for Common Stock Holders alone.

That means we need to subtract that of Preferred Stock.

= 4,400,000 - 200,000

= $4,200,000 is the amount of Stockholder Equity that is for Common Stock Holders.

We can then divide it by the total number of Common Stock to find out the book value per share.

= 4,200,000/120,000

= $36.6666667

= $36.67

$36.67 is the book value per share of Common Stock as of end of the FY 2018.